What Is Mining

What is mining?

When users of our network send each other Vertcoin, their transactions are secured by a process called mining. Miners will compose a so-called block out of the pending transactions, and need to perform a large number of computations called hashes in order to produce the Proof-of-Work. With this Proof-of-Work, the block is accepted by the network and the transactions in it become confirmed.

Mining is essentially a race. Whoever finds a valid Proof-of-Work and gets the block propagated over more than half of the Vertcoin network first, wins this race and is allowed to reward themselves with the block reward. The block reward is how new Vertcoin come in circulation. This block reward started at 50 VTC when Vertcoin was launched, and halves every four years. The current block reward is 25 VTC.

tldr: Mining secures the network in the best way with the least amount of known flaws to any other known system.

So mining is like Gold Mining? Not quite, that’s only half the story… (Consensus)

Miners also control the history and current events that happen on the blockchain. If enough of these nodes are malicious they can disrupt the system.

tldr: Mining is like a spade that’s also a voting tool simultaneously… if enough of them are malicious your blockchain blows up, so make sure there isn’t a single actor…

Why does Vertcoin use GPUs then?

Block Time Copy 2Created with Sketch.ASIC’s(Manufactuer Monopoly)

If mining were just a spade sure, use the most powerful equipment which would be an ASIC. The problem is ASICs are not widely available, and just happen to be controlled by a monopoly in China.

So, you want the most widely available tool that produces a fair amount of hashrate, which currently manifests itself as a Graphics Card.

CPUs would be great too but unfortunately there are viruses that take over hundreds of thousands of computers called Botnets (they’re almost as bad as ASICs).

tldr: equal out all the devices as much as possible, blockchain security equals total hashrate / how distributed it is. Hashrate by itself is not security.

Mining in pools

Because mining is a race, it’s difficult for an individual miner to acquire enough computational power to win this race solo. Therefore there’s a concept called pool-mining. With pool-mining, miners cooperate in finding the correct Proof-of-Work for the block, and share the block reward based on the work contributed. The amount of work contributed is measured in so-called shares. Finding the Proof-of-Work for a share is much easier than finding it for a block, and when the cooperating miners find the Proof-of-Work for the block, they distribute the reward based on the number of shares each miner found.